The GOLDEN AGE of Facebook Ads (When Will It End?)

0:00we need to talk about Facebook advertising now there's been a lot of negative press recently about Metro as a company and that's led to a lot of advertisers worrying understandably so about the future of the business but also the future of Facebook and Instagram as advertising platforms and it's important to a lot of people that watch my content they rely on Facebook and Instagram ads for client customer acquisition it's a big part of their business and without that they need to find alternative sources maybe their business won't be a profitable maybe their business wouldn't even be viable without this platform so I really need to talk through some of this stuff and

0:33this is this is stuff that I think about a lot and I take this threat this platform threat very very seriously because my business is a Facebook and Instagram Ad Agency I have 30 plus people working for me we have over 100 clients I have hundreds of thousands of people that consume my content so the stakes for me could not be higher around the future viability of this platform what's going to happen so I spend a lot of time thinking about the likely future so what I'm about to say is not spur at the moment anything like that is very much thought through and it is through the lens of someone who's

1:05taking the potential risks to the platform very very seriously given all the people that rely on me for that so let's start by talking about the recent news that came out that people have reacted pretty poorly to that isn't overly positive about meta as a company and that's they released their quarterly numbers like they have to do every quarter because they're a publicly traded company and in Q3 2022 and they were significantly less profitable than they have been previously particularly when you compare the same quarters you compare Q3 of 21 or 20 um significantly less profitable now within that when you dig a little bit deeper you will see that their revenue

1:39is pretty consistent um when you compare year over year quarters but their costs have increased massively and that's accounted for the drop in profitability and their costs have increased massively for obvious reasons Mark Zuckerberg is putting a lot of time Focus resources money into building the metaverse he sees that's the future of matter and that's very expensive to do and actually in response to this drop and profitability he's decided that they're going to lay off around about 11 000 people to cut those costs and bring the profitability and back up now I think that the metaverse is not the best bet not likely to pay off and I wish that meta wasn't focusing

2:19on that I wish that they would ditch that project and focus more on Facebook and Instagram platforms and improve it for both users and us as advertisers think they're likely to get there at some point how long that'll be who knows but that recent report obviously was not good for the company no company wants to show a big drop in profitability that's going to cause the share price to drop which has happened and that's going to cause a lot of negativity in the market but here's something that I really want you to understand if you are a Facebook and Instagram Advertiser the profitability of the business the share

2:51price of meta does not actually affect you you are not an investor in the business it's different objectives the value of matter to investors is the share price if that drops that's bad the value to advertisers in meta is the users in Facebook and Instagram those are the people that we want to reach because we want to sell our products Services Etc so instead of looking at the profitability of matter and trying to work out is this a viable ad platform is it going to run into issues going forward instead you should be looking at the user base and the user base of both Facebook and Instagram has remained very

3:25steady for a number of years now in North America and Europe using numbers are pretty stable virtually haven't changed for a few years it goes up and down a little bit in the rest of the world we're still seeing more direct growth now of course we're not seeing the massive explosive growth that we saw first with Facebook and then with Instagram because once you get to about three billion total users there's just not that many more people you can keep adding on and the constraints of the planet's population how many people have access to you know smartphones and things like that start to become an issue but they user base right now in

3:57these quarterly reports is very consistent they have to report on that as well now a lot of Facebook advertisers are conflating the two as I said they're seeing or dropping share price they're thinking this bad platform is a sinking let's leave it's only the drop in the user base that would really worry me as a Facebook Advertiser and as someone who's built a business around Facebook advertising because if the users aren't there there aren't the people going on these platforms all the time for us to be able to put our staff in front of and get their eyeballs that becomes a real issue We're not gonna be

4:24able to generate sales leads Etc and we're going to have to look elsewhere but whilst that isn't happening I think a lot of the concerns of Facebook advertisers have are very much unfounded they're just looking at the wrong thing and paying attention to what is sensationalized media and and that's just not a good move and not a good way to plan your business or plan your future marketing efforts so in a nutshell this drop in share price which is as a result of a loss of profitability as opposed to a loss of users is not something that you and me need to worry about as Facebook

4:53advertisers and actually ironically it might actually be a good thing now when this news comes out despite what I've just explained there are going to be advertisers that see that and think they shouldn't be advertising on the platform they're going to leave or they're going to scale back their budget there are new businesses being created all the time and there would otherwise be lots of new people advertising on Facebook and Instagram that maybe you're going to go to tick tock or YouTube or some other platform instead because of news like this that's actually fantastic for us that are going to stay on the platform the cost of Facebook and Instagram

5:23advertising is set by competition it's an auction system if you were to remove all other Facebook advertisers from the whole world and I was the only one that was able to advertise on the platform I could literally become a billionaire in a matter of days because I could Hoover up all that attention all those hundreds of millions billions of people's eyeballs for next to nothing sell just about anything and it would work incredibly well it's why Facebook advertising in 2014 when I started was a lot less expensive than it was well than it is today and each year it got more and more expensive because more and more

5:58competition joined the platform now with a lot of this more negative press and there has been negativity around a lot of the iOS 14 changes any other advertisers that leave that's good for us those of us that are going to stay because that's going to reduce the cost of advertising most of the time we would measure that in cpms and that's great because if the ads cost less we're going to see higher return on ad spend numbers we're going to see more purchases more sales and higher profitability so actually if you're committed to the platform and you're going to stick around you kind of want the news to get as bad as possible and

6:29as many other advertisers to sort of get scared and leave as possible as long as the user base isn't affected so that's the leading indicator that's the thing we really need to watch out for and to help highlight this point there's actually a little experiment that you could run right now or a data point that you can check that will help verify what I'm talking about for many many years the cost of advertising on Facebook and the cost of advertising on Instagram was virtually identical you would see same cpms and cpms by the way cost per thousand Impressions is what we usually measure to assess the cost of Facebook

7:00ads because if we're looking at hospital conversion or cost per click that's so dependent on the quality of the ad targeting all that sort of stuff whereas cpms is a really good metric to use to assess cost and for years Facebook and Instagram were very very similar however if you look at your data now it is likely that you will see that your cpms on Facebook are a good chunk less than your cpms on Instagram why is it because Instagram is the more effective ad platform no it's because advertisers see Instagram as cool trendy platform where younger people are and they are more likely to want to spend there and put

7:35more of their budget there and that creates an opportunity for those of us that are going to continue advertising on Facebook because the cpms are decreasing Now by all means I usually recommend that you advertise on both Facebook and Instagram but that shift in Advertiser behavior is really positive for us and if you want to have a look at this you could just go to one of your campaigns go and select breakdown and then take a look at the buy platform data take a look at the CPM column and see what the difference is it's very common to see for example a CPM in Facebook of 25 let's say and a CPM and

8:05Instagram of 35 those numbers could vary massively depending on location industry all that sort of stuff but that's the sort of discrepancy that we're starting to see that certainly wasn't there a few years ago now how do I know that isn't because Instagram is actually more effective well it's not what we're seeing from the work that we're doing with our clients but also I polled my YouTube audience and I asked them which delivers the best results for you so we're not looking at cpms here we're looking at your cost per result your return on ad spend and and most people said that Facebook was the more

8:34effective platform and that's what we're typically seeing two or three years ago I would have said it was 50 50. so I'm just gonna see better results Facebook some with Instagram your ad budget is going to be split accordingly um Facebook's meta is going to be able to work that out for you but now because more and more advertisers are moving away from Facebook it kind of has a worse name they want to go after the trendier cooler Instagram and platform how do you do fellow kids what we're seeing cheaper more Supply and cheaper options on the Facebook ad side of things and because of that we're now

9:05starting to see better results on Facebook than we are on Instagram and just on that point there's another something I want to highlight that I've spoken to a lot of business owners about and that's they often say that they want to advertise on Instagram because that's where the the younger people are for example and I like to highlight the fact that the number one determinant of someone's wealth is age and actually would you rather advertise someone that's 23 on Instagram or 53 on Facebook now the average age differential is not 30 years but just go with me with this example well actually most products or Services you'd much rather advertise to

9:37the 53 year old particularly if it's going to cost you less to reach that 53 year old than the 23 year old because the average 53 year old has a lot more disposable income than the average 23 year now of course within that there are all sorts of products that are more applicable to younger people Etc and things along those lines right but in general advertisers marketing it's not seen as cool to advertise to an older demographic even though older people actually have more money and are more likely to be able to afford whatever it is you're advertising or it's at least an easier decision for them to just go

10:07yeah I'm going to go ahead and purchase then someone in their 20s or maybe someone in their 30s that's got costs on family and all that sort of stuff right so that's just a little aside to basically say don't ignore Facebook because you think Instagram is the the cooler option okay so in a second I'm going to explain what I think it's like to happen going forward with these platforms I've sort of addressed some of the current ongoing concerns we have right now but what's likely to happen in the future because that's obviously going to play into your decision making process and how much time effort

10:33resources you put into these platforms before I do just want to quickly mention our done for you services so my company can create manage and optimize your Facebook and Instagram ad campaigns we can take it off take that workload off your hands almost certainly help you get better results and if you're interested in finding out more you can click on the link in the description below that'll take you to a page on our website where you can book in a call with one of my team members we do have a 3K per month minimum budget requirement so please don't give a call if you meet that or

10:57you're about to be in that sort of range hopefully we get a chance to work here okay so what's likely to happen to Facebook advertising and Instagram advertising going forward I think this is definitely something that needs to be addressed because I've described that I think Facebook and Instagram ads are fine right now but if they were to be going away in a couple years time that's not something you want to build a business around so that's something that we need to discuss and I need to explain so let's start with Facebook the cats first it is true that the younger demographics are not joining Facebook

11:23it's a well-known phenomena now that people do not typically join social media platforms that their parents are already on so people who are turning let's say 15 and joining social media platforms a lot of people do so younger but let's say around that age they're not going to join Facebook because they're 45 year old parents have been on Facebook for more than a decade they're just not going to do it so that means that most social media platforms have a life cycle that 15 yards Farm I like to spend a lot of time right now on Tick Tock because their parents are on Facebook and that's just the way these

11:55things go so does that mean that Facebook as an ad platform is going to last forever I'm separating Instagram for a second probably not I think it's likely that it will die at some point foreign becomes when if you take the current user base and you sort of go through with them I think that's what's likely to happen I don't think that the current user base people in their 30s 40s 20s to some extent and people in their 20s some of them are on the older 20s not some of the the younger ones and people in their teens certainly aren't but let's say we've got people in our 30s and up on

12:30Facebook well they're probably going to stay for the most part and they're going to age through the system of course we're going to see some drop off but they're going to age through the system so what does that mean to the platform I think it means that for the next 10 years we're absolutely fine if these people are continue to be active on this platform those a lot of the people who want to reach me you may have a product that's advertised to 18 year olds if you do great Facebook ads and AD platform is probably not for you but for the vast vast majority of us that are very happy

12:56to put our ads in front of people in let's say 25 or 30 and up for the next decade it's absolutely fine and yes after 10 years the older generations and you know people die they're going to start not being on the platform they're going to become less involved and we're going to keep that process going so I would expect Facebook to be absolutely fine for another decade between 10 and 20 years from now we're going to start to see just a slow Decline and then there will reach a bit of a Tipping Point where all of a sudden it drops off but I really don't see that happening

13:26anytime soon so that's what I see happening on Facebook itself and these things could all change by the way I'm going to talk about some potential wild cards in a minute then we've got Instagram which is different younger Generations are joining Instagram not as much as they are Tick Tock but it's there's more of a replenishment rate and the Instagram audience in general is going to be a decade or so younger than the Facebook audience just because of when these things first became popular so you can basically I think apply the same process what I just talked about where we're golden for 10 years with Facebook between 10 and 20 we see a slow

13:56drop off and then maybe something more significant I think you could do the same process with Instagram but add on another decade within my working career do I expect Instagram ads to not exist no I think that is very much likely continue for 30 years or so Instagram users are continuing to grow and I don't see anything drastic happening with that anytime soon if you're wanting to plan your business and your future client acquisition you can absolutely work on this platform and use it to grow your business very much so now there is a wild card and extra sort of interesting note with Instagram that I want to

14:27mention and that's that a lot of the younger users that would otherwise be on Instagram are on Tick Tock now Tick Tock has been banned in India given its connections to the Chinese government it's quite likely that other countries in my opinion will follow suit I would not be at all surprised to see some of the Western European countries ban Tick Tock maybe North America depending on you know who happens to be in charge at the time and and what they want to do and the reason will be security concerns that's what India stated as their reason for finding Tick Tock was security concerns now if that were to happen all

15:01these people aren't going to stop using any sort of social media platform they will instead move to something else well right now that would be Instagram instead of spending that time on Tick Tock they would jump over and spend the time on Instagram reels instead so this is something that is a bit of a wild card we don't know whether it's going to happen I think it's more likely than most people expect that Tick Tock really could be banned in certain countries and if they happen to be really significant players Western Europe maybe even the EU the US for example that would be absolutely devastating the platform that

15:35would cause a ripple on effect and other people probably leave and then we'd see them on another platform and most likely at the moment most of those people would go over to Instagram now of course no one can predict this stuff 100 then there will be new social media platforms coming up although that has become quite rare in in recent years for anything new to be able to break into the existing um sort of sphere with existing world of social media platforms even platforms that have had really big issues like Twitter they've been well publicized they keep going once someone once something becomes big and entrenched it

16:05seems very very difficult to uh get knocked off it's perched or move aside by something else which happened a lot more in the early days the rate of change amongst these platforms is very much slowed down and I just feel that if you're a Facebook Advertiser and you're not wanting to commit to this platform because you're worried about the future viability of it I really don't think that's going to be an issue anytime soon as I said I'm talking to someone who is massively exposed to that risk I've always been honest on my channel I've always told you about new features changes that are good changes that are

16:36bad what I think is likely to happen I think that's been really important to the growth of my channel is being able to just be like here's what I see and you've it's not like I'm always sunshine and rainbows about Facebook ads as a platform I've released many videos saying things like this is a bad feature don't use it this is within meta's interest not yours and that's what I'm being here take this threat very seriously I've talked to other experts in industry and over let's say at least a 10-year period I am not immediately concerned and actually the worse the news gets the more advertisers leave the

17:05lower the cost of Facebook advertising is that's great for those of us that can continue advertising on the platform and given all that I'd strongly recommend you check out this video it's a full Facebook ads beginners tutorial I walk you through the entire process of setting up your first Facebook ad campaign from setting up your business manager in the first place to getting your targeting right ads all that sort of stuff definitely go through it there's all chapters so you can skip through to the relevant part go ahead and check it out